Chapter 13 Bankruptcy in Michigan

What is Chapter 13 Bankruptcy?

 

Individuals can file for Chapter 13 bankruptcy protection if they would like to develop a plan to repay all or some of their debts. The purpose of this type of bankruptcy is to reorganize and renegotiate the debts, for instance at a lower interest rate.

 

This is different than Chapter 7 Bankruptcy in that Chapter 7 requires liquidation of most assets, while Chapter 13 requires restructuring of debts.

 

One of the big advantages to Chapter 13 Bankruptcy is that the debtor can be discharged of debts without liquidating or selling their assets, such as their home. Relief under Chapter 13 of the Bankruptcy Code is available only to people and not to businesses.

 

Chapter 13 Bankruptcy is designed for those who have a regular income and who, therefore, will be able to afford repayment. Under this bankruptcy code, the debtor has a maximum of five years to repay debts but a three year plan is more common. Your bankruptcy lawyer will try to protect your best interests, but the courts will carry out the bankruptcy process.

 

How does Chapter 13 Bankruptcy Work?

 

The first step is for the court to approve repayment plan. Your plan is written by your bankruptcy attorney. This written plan will begin within 30 to 45 days of the case’s commencement. The plan will include all the details of debt repayment, including the duration of the transactions. Normally, payments will occur over 3-5 years and are made directly to a bankruptcy trustee in either weekly, bi-weekly or monthly installments.

 

The trustee will then take a small percentage of that payment as a fee for their work, then distribute the payments to the creditors. This means that the debtors will have no direct contact with any of their creditors. In fact, the law states that creditors are not allowed to contact their debtors in attempt to collect on their claims.

 

What are some advantages of Chapter 13 Bankruptcy?

 

One big advantage of Chapter 13 over Chapter 7 Bankruptcy is that there is an option for full discharge under Chapter 13. This means that once the debtor pays all debts under the repayment plan, then he/she is relieved from all associated liabilities. Note that there are a few exceptions to this rule, which can be discussed with your bankruptcy attorney.

 

Another advantage to Chapter 13 Bankruptcy is that the court approves your repayment plan – not your creditors. Your attorney can help you create a favorable repayment plan, and it does not necessarily matter if your creditors agree with it or not, so long at the court approves it.

 

Again, this might involve reduced interest rates, extra time to pay a debt, discharge of some of all of a debt or some combination of these. However, the plan still must have a component of fairness, not only so that it can be approved by the court, but so that your creditors don’t file an objection.

 

Who is eligible for Chapter 13 Bankruptcy?

 

Any individual with a regular income is eligible to file for Chapter 13 Bankruptcy, as long as their debts are below the maximum limit. There are a couple other requirements, all of which you can discuss with your attorney.

 

How do you file for Chapter 13 Bankruptcy?

 

There are quite a few complex steps that go into filing for Chapter 13 Bankruptcy. However, our expert bankruptcy attorneys will help you through every step, to make the process as seamless as possible!

 

To file for Chapter 13 Bankruptcy, you should consider the following. This is a very simplified list, but it will get you started. Always remember to discuss your concerns with an experienced bankruptcy attorney before making an life-altering decisions.

 

  1. First, examine your options and determine whether or not Chapter 13 is the best option for you. Your attorney will guide you through this.
  2. Work with your bankruptcy lawyer to prepare a budget for your repayment plan.
  3. Examine your specific case to decide if filing for Chapter 13 Bankruptcy is actually necessary, or if there is another way to repay your debts.
  4. Determine and implement methods of dealing with secured creditors.
  5. Devise a plan and fill out petitions, schedules and other pleadings required for Chapter 13.
  6. Complete all filing forms and pleadings, and pay the filing fee.
  7. Attend required meetings with creditors, attend court hearings, etc.
  8. Finish the repayment plan and obtain a discharge.

 

Of course, the list above is extremely simplified, but your attorney from The Kronzek Firm will help you through the process and work through all the steps in between! We will ask you to fill out an evaluation form and determine whether or not it is necessary to file for bankruptcy protection in the first place. Afterwards, our lawyers will work with you to get you out of your financial crisis.

 

The Kronzek Firm attorneys are available 24/7 all year long. For immediate assistance, call our Lansing office at 1-517-886-1000.

 

If you are in need of an aggressive bankruptcy or debt relief attorney, call us at 1-517-886-1000 or email us today!

 

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